Our clients include companies, platforms, technologists, investment managers and funds, banks, broker-dealers, exchanges, and private equity and venture capital investors. We work extensively with alternative trading systems, high frequency and algorithmic trading firms, digital investment advisers, data companies and other financial services innovators.Here are examples of how we helped clients:
- A Chinese bitcoin mining company in connection with a global data breach in which US$500 million of bitcoin was stolen.
- A digital asset and technology company with respect to the establishment of a de novo special purpose national bank charter.
- Affirm, Inc., Avant, Inc., Carvana Co., BFS Capital, Inc., Enova International, Inc.and loanDepot.com, LLC in connection with bank partnership arrangements; whole loan sale and forward flow programs; 144A securitization transactions; and warehouse and term financing facilities.
- A global e-commerce trade association regarding the development of comprehensive, practical behavioral advertising and other online privacy guides.
- A global financial services institution in connection with the establishment of a business to provide digital credentials and authentication services. We advised on strategies for the protection of core technologies and for the commercialization of products and services. We also prepared and negotiated agreements relating to the development of the digital technologies, partnering agreements with third parties to support the exploitation and commercialization of the technology, and customer and user services agreements.
- A global financial services provider on a Microsoft Office 365 email intrusion that lead to the exposure of thousands of health insurance records, including information protected under HIPAA; as well as the defense of HHS/OCR and day-to-day counseling on privacy/cybersecurity issues.
- A global financial services provider regarding legal risks associated with implementing novel actions to protect company systems and customer data.
- A global provider of financial services software on formulating and implementing a CCPA program for current and contemplated products and services.
- A global provider of services to the financial services sector in Board training on the evolving role of corporate boards in understanding and accountability for cyber and data security risk.
- A hedge fund in its complex settlement agreement with a software developer with respect to the ownership of high-frequency trading software and the underlying algorithms used to make trades using the software.
- A Hong Kong licensed fund manager in connection with securing regulatory approval to manage portfolios that directly invest up to 100% in virtual (crypto) assets from the Hong Kong Securities and Futures Commission (SFC).
- A major fintech company in an inquiry regarding money transmission licensing requirements.
- Angels of Impact, a Singaporean social enterprise group, in establishing a fund that uses blockchain technology to make sustainable and ethical investments. The technology allows Angels of Impact to track returns and reduce misuse of funds.
- A private equity firm in its investment in a global electronic trading firm.
- A U.S. start-up in its registration with the SEC and membership in FINRA as the first broker-dealer approved to operate an alternative trading system to trade U.S. Treasury securities.
- BerkShares in the development of the BerkShares platform, in what is expected to be an exciting new application of blockchain technology within the context of a digitized local currency. Dechert worked with its client, the Schumacher Center, and a consortium including BerkShares, banks and app developers, for over a year in migrating BerkShares to a blockchain-based system, addressing unique regulatory and licensing issues.
- Advised BitFury Group, a leading bitcoin infrastructure provider and bitcoin transaction processor, on equity financing.
- Blackboard Inc., a leading global educational software company and an affiliate of Providence Equity Partners, in its US$260 million acquisition by tender offer of Higher One Holdings Inc., a NYSE-listed financial technology company and the 2019 sale of its Blackboard Transact business unit to Reverence Capital Partners, LP.
- Advised Blockchain Limited, the largest crypto e-wallet and blockchain search provider, on its reincorporation and initial equity financing transactions.
- Certain large mutual funds complexes and their boards of directors with respect to the acquisition by the funds of residential mortgage loans.
- Digital Asset Strategies in connection to the launch of a cryptocurrency hedge fund.
- Figure Technologies, Inc. on the US$20 million security token offering successfully completed by Provenance Blockchain, Inc.
- Figure Technologies, Inc. on its closing of a US$1 billion asset-based financing facility custodied on its Provenance.io blockchain.
- Fund managers in connection with loan purchases and financing facilities related to loans originated on platforms sponsored by Lending Club, SoFi, Freedom Plus, Square, CommonBond, Funding Circle U.S., Funding Circle U.K., Upstart and others.
- Further Global Capital Management in its acquisition of Payment Alliance International, the nation’s largest privately-held ATM provider.
- GIC in connection with the US$20 billion acquisition by an investor group of a majority stake in Thomson Reuters’ Financial & Risk Business (Refinitiv) and subsequent sale by the investor group of Refinitiv, a global provider of financial market data and infrastructure, to the London Stock Exchange for US$27 billion.
- GIC on the merger of Ultimate Software, a specialist HR software solutions and HR payroll, and Kronos Incorporated for an enterprise value of US$22 billion.
- Interactive Brokers Group, an automated global electronic market-maker and broker that operates in more than 60 electronic exchanges and trading venues around the world, in its US$1.2 billion initial public offering. This represented the second largest IPO (at the time of issuance) in 2007. Beyond its significant size, the transaction was noteworthy because: it was conducted through a non-traditional “best efforts”/Dutch auction approach.
- iTrustCapital on a variety of tax and regulatory issues related to their highly innovative product offerings. iTrustCapital is the world’s largest platform for buying and selling cryptocurrencies through individual retirement accounts and has secured a US$125 million Series A equity raise for its Crypto IRA software platform, with a post-funding valuation over US$1.3 billion.
- JetPay, a provider of end-to-end payment processing and Human Capital Management solutions, on its US$184 million sale to NCR Corporation.
- J.P. Morgan on its agreement to acquire OpenInvest, a leading financial technology company that helps financial professionals customize and report on values-based investments.
- Morgan Stanley Investment Management in the establishment of AIP Alternative Lending Fund A and AIP Alternative Lending Fund P - registered closed-end funds organized primarily to acquire marketplace loans.
- Multiple alternative trading systems regarding compliance with Regulations ATS and NMS and responses to the SEC and FINRA in connection with SEC and FINRA examinations.
- Conduct comprehensive reviews of electronic order routing by multiple stock and options exchanges for compliance with Regulation NMS’s trade-through rule.
- Nordic Capital on the EUR 2.143 billion sale of Itiviti, a leading provider of trading technology and services to financial institutions worldwide, to NYSE listed Broadridge Financial Solutions, Inc.
- Pagaya Investments, as issuer, grantor trust, sponsor, administrator, depositor, in connection with a US$900 million 144A/Reg S private asset backed securitization, backed by loans underwritten by Cross River Bank, LendingClub Bank, National Association, Upgrade Inc., Marlette Funding LLC and Prosper Funding, LLC.
- Pagaya Investments, as issuer, grantor trust, sponsor, administrator and depositor, in connection with a US$423 million 144A asset backed securitization, the company’s first rated consumer loan securitization, backed by loans underwritten by LendingClub, Upgrade Inc., Avant, Marlette and Prosper Funding.
- Pagaya Investments, as sponsor and administrator, in connection with a US$115 million transaction and it’s first to be backed by loans underwritten by Prosper.
- Pagaya Investments in a US$100 million securitization which was a 100% prefunded private 144A securitization of unsecured consumer loans. All loans in the deal were originated by LendingClub.
- Pagaya Investments, as borrower and issuer, in connection with a US$350 million single-family rental securitization, the company’s first single-family residential securitization.
- Pagaya Structured Products LLC as sponsor in connection with a US$1.2 billion securitization of marketplace consumer loans, the largest ever unsecured consumer loan securitization (eclipsing the previous largest which Pagaya closed in 2020).
- Pagaya US Holding Company LLC, as issuer, in connection with a US$500 million deal, a fully prefunded deal with assets originated on the Avant, LendingClub, Marlette, Upgrade and Prosper platforms through originating banks, including LendingClub and Cross River Bank.
- Pagaya US Holding Company LLC, as issuer, in connection with a US$200 million deal, the company’s first personal credit line securitization, backed by unsecured consumer credit line receivables underwritten by Cross River Bank and Upgrade, Inc.
- People’s United Bank in a summary judgment victory in a landmark case, which involved an alleged breach of the bank’s online security system through keylogging malware. One of the first cases of its kind to be decided by an appellate court and named a “national case to watch” by the American Banker, the dispute was resolved after the First Circuit reversed in part and remanded the district court’s decision.
- PPC Enterprises in connection with its acquisition of Private Client Resources, L.L.C. (“PCR”). PCR provides wealth data aggregation solutions and services to financial institutions, advisors and leading technology providers to the ultra-high-net-worth segment
- Public Pension Capital (PPC Enterprises) and its portfolio company Viteos, a tech-enabled provider of end-to-end middle and back office administration for asset managers, on Viteos’ sale to Intertrust N.V.; recognized as finalist for “Private Equity Deal of the Year” by The Deal Middle Market Awards 2020, and in connection with the prior acquisition of Viteos.
- SolidX regarding SEC compliance and related issues in connection with a proposed bitcoin-based exchange-traded fund on the NYSE.
Bankruptcy of a cryptocurrency trading entity and of an exchange would raise a variety of unsettled legal questions that Dechert is uniquely qualified to handle having both extensive Crypto currency expertise and a sophisticated bankruptcy department.
The key issues relate to the eligibility of exchanges to file for bankruptcy, whether cryptocurrency would be considered estate property, proper valuation methodologies, and nature of the crypto assets within existing legal regimes.
Dechert’s Financial Restructuring Group, and its Blockchain and Cryptocurrency practice have closely followed the development of these issues both inside and outside the United States.
- Eligibility of crypto exchanges as debtors under the Bankruptcy Code. At issue is whether a cryptocurrency exchange can qualify as a debtor under Section 109 of the Bankruptcy Code and be able to seek relief under Chapter 11 or Chapter 7. Section 109 excludes certain commodities brokers and banking institutions from eligibility.
- Cryptocurrency as property of the exchange’s bankruptcy estate. Whether, in the event of the bankruptcy of a crypto exchange, the users’ cryptocurrencies will be considered property of the crypto exchange’s bankruptcy estate. If so, customer currency may be used to satisfy senior debt, and customers may not recover their assets in full. The existence of custodial or noncustodial wallets, the applicable terms and conditions of such wallets, and the existence of a constructive trust, may affect the ownership of these assets in the event of bankruptcy.
- Nature and legal status of cryptocurrencies. The determination of the nature of cryptocurrencies, whether as a security, commodity, currency, or a hybrid, can have significant consequences in the context of avoidance actions (either by seeking the return of the cryptocurrencies themselves or their value), distribution of claims, recoupment rights, and the application of the automatic stay, among other issues. It remains to be seen whether bankruptcy courts will adopt, for example, the reasoning of the U.S. District Court for the District of Massachusetts, which stated that bitcoin can be considered as a commodity under the Commodity Exchange Act and whether courts will adopt rulings under the Securities Laws largely finding them to qualify as securities.
- Cryptocurrency as collateral. In those cases where cryptocurrencies are used as collateral, the determination as to their nature could also present important implications, mainly related to the proper perfection methods, their use as "cash collateral" and the "adequate protection" that secured creditors may be entitled to.
- Lack of uniform valuation methods and valuation date. There is uncertainty as to how - and as of what date - cryptocurrency would be valued in a bankruptcy case.
A virtual series presented by Dechert
fintechNEXT: Better Understanding Risk in the Investment Process (October 21, 2021)
fintechNEXT: The Institutionalization of Bitcoin: What’s Next (February 24, 2021)
fintechNEXT: The Mainstreaming of Bitcoin (January 27, 2021)
fintechNEXT: Digital Investment Advice in the Age of COVID-19 (September 17, 2020)
fintechNEXT: The Venture Capital View of Fintech (August 6, 2020)